“Risk appetite has become core to the private banking
service again,” Odier said in an interview on the sidelines of
the Invest12 conference in Geneva. “There’s a trend toward
security and safety which means the more transparent and less
esoteric products are favored, in contrast to those that are the
most attractive for a short-term investment return.”

Clients of UBS AG, Switzerland’s largest bank, are
“paralyzed” by their fear of losing wealth in volatile
financial markets, Sergio Ermotti, the Zurich-based firm’s chief
executive officer, said July 31. The renewed focus on risk comes
as the erosion of Swiss banking secrecy makes investment returns
a key benchmark for wealth managers such as UBS and Credit
Suisse Group AG.

Private banking is going through major change that requires
“continuing innovation in the field of portfolio management,”
said Odier, who is senior managing partner of Lombard Odier &
Cie, Geneva’s oldest bank.

Private bankers need to learn to “budget” for the risk
clients are willing to take and design absolute return
portfolios, he said. That type of portfolio measures gains and
losses over a given period rather than comparing their
performance with a particular benchmark.